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The Bank of England plans on releasing a consultation proposal by the end of the year, Jon Cunliffe said at Innovate Finance’s annual global summit.

Joey Krug, former co-chief investment officer for Pantera, joined Peter Thiel’s Founders Fund as a partner.

Krug announced the move in a Twitter thread earlier today, saying that he’ll be working on Founders Fund’s crypto investment efforts. Bloomberg reported the news earlier.

It’s a notable hire in the world of crypto venture capital. Krug departed Pantera in February after a six-year stint at the VC firm.

“I’ll be focused on defining the next decade of Founders Fund’s crypto strategy while looking for the next wave of generational crypto startups and founders to back,” Krug wrote. 

Founders Fund was formed in 2005 by a group of PayPal co-founders including Peter Thiel. Its portfolio includes Facebook, AirBNB and SpaceX. Its crypto portfolio includes Ordo Finance and Block Green.

Founders Fund drew headlines in January after it netted nearly $2 billion from sales of its bitcoin holdings in 2022, according to a Financial Times report at the time.

© 2023 The Block Crypto, Inc. All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.

“They sent us the term sheet a week after FTX blew up.”

Aya Kantorovich — a crypto markets wonk — is talking about her new startup Fractal, which in her opinion could have prevented many of the capital market blunders that plagued the scabrous industry in 2022. 

Hack VC said it sent the term sheet to Fractal on November 18, seven days after FTX filed for bankruptcy, and amid increasing institutional investor interest in on-chain finance. 

The new company, which announced a $6 million fundraise on Monday, is building out a platform that facilitates more transparent clearing and settlement in digital assets, stripping out the opaqueness that led to the levered deal-making that precipitated the collapse of firms like Three Arrows Capital and FTX. 

“Fractal was incubated out of LedgerPrime while Alex was still there and I was a client of FalconX,” she said, referring to Alex Elkrief, a former LedgerPrime engineer and co-CEO of Fractal alongside Kantorovich.

LedgerPrime, a hedge fund, was acquired by FTX in 2021 and turned into a family office before the bankruptcy. Kantorovich and Elkrief married in July and Kantorovich joined the Fractal team on April 1. 

Limited collateral

With Fractal, clients will be able to monitor their positions in real time with counter-parties to reduce counterparty risk. In theory, that means that a counter-party can’t trade using the same collateral with multiple counter-parties.

Collateral for borrowing will be limited to crypto blue-chip coins to avoid the wrong-sided liquidity issues that counter-parties face with Alameda, which borrowed against their holdings in their native token FTT. 

“A trade with counterparty A and counterparty B doesn’t necessarily affect the rest of their counterparties because they all have segregated accounts and you have to post collateral with each account,” Kantorovich said. “If someone deposits $10 million with a counter-party and that shows up in a dashboard, you can see it is not being rehypothecated.”

Transparency

Fractal’s not alone in its mission. Longtime crypto markets executive Michael Moro joined an upstart derivatives exchange called Ankex as CEO after stepping down from beleaguered lending and trading firm Genesis Global Capital.

“Having come from Genesis and seen the events of 2022 unfold, I’m acutely aware of the importance of empowering traders to operate on trustless platforms while retaining full control of their assets at all times,” Moro said at the time.

To be sure, institutional traders also crave under-collateralized loans because they are more capital efficient. 

“It is challenging to cross collateralize on-chain yield bearing assets, OTC bilateral agreements in a cost efficient way. Fractal solves this by putting it on-chain, which is transparent, and efficient for both sides of the transaction. QCP Capital is pleased to support such a solution that improves capital efficiency and catalyzes the progression of DeFi,” said Stan Low, head of investments, QCP Capital.

QCP invested alongside 6th Man Ventures, Archetype. Blizzard and CMT Digital. Other investors include Golden Tree Asset Management, CoinShares and Spartan Group.

© 2023 The Block Crypto, Inc. All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.

Bitcoin led the way as digital asset investment products saw inflows for a fourth week in a row last week, according to Coinshares.

The world’s largest cryptocurrency by market cap saw inflows of $104 million, making up the bulk of the $114 million total. Bitcoin has surged about 80% year to date, though it’s recently dipped below the $30,000 level. It’s seen inflows of $310 million over the past four weeks.  

“We believe this is a flight to safety by investors fearful of the ongoing traditional finance challenges,” Coinshares said. “Opinion remains divided though, with short bitcoin seeing inflows totaling $14.6 million last week.”

Ether inflows totaled just $300,000 as Ethereum completed its Shapella upgrade. CoinShares also noted that there was little activity in altcoins, save for $2.1 million of outflows from Polygon.

Inflows over the past four weeks total $345 million, almost completely reversing a prior six-week run of outflows that saw $408 million leave the sector. 

© 2023 The Block Crypto, Inc. All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.

Greg Siourounis will lead efforts to promote Sui’s user base growth and development.

The New York Department of Financial Services (NYDFS) has adopted a new regulation for how crypto companies will be assessed for costs associated with their supervision.

The U.S. Securities and Exchange Commission filed a lawsuit against crypto exchange Bittrex and one of its co-founders alleging it was operating as an “unregistered national securities exchange, broker, and clearing agency.”

Bittrex co-founder and former CEO William Shihara was named in the suit as was the exchange’s foreign affiliate, Bittrex Global GmbH. The latter, it is alleged, failed to “register as a national securities exchange in connection with its operation of a single shared order book along with Bittrex.”

The SEC accused the defendants of taking steps to avoid regulatory scrutiny.

“Before Bittrex would make an asset available on its platform, Bittrex and Shihara instructed issuer-applicants to delete statements related to “price prediction[s],” “expectation of profit,” and other “investment related terms,” the regulator said in a press release announcing the charges. 

The move against Bittrex is the latest in a string of regulatory actions taken by U.S. agencies policing the crypto space. Binance, Paxos and Kraken are among the crypto companies that have been charged in recent weeks by U.S. regulators.  

Bittrex quit U.S. business

Bittrex just last month said it was shutting down its U.S. operations. At the time, co-founder and CEO Richie Lai wrote, “[r]egulatory requirements are often unclear and enforced without appropriate discussion or input, resulting in an uneven competitive landscape.”

SEC chair Gary Gensler has argued that existing U.S. regulations cover digital asset exchanges and that such venues are allowing the trade of what the SEC deems securities.

Gensler said Monday: “Today’s action, yet again, makes plain that the crypto markets suffer from a lack of regulatory compliance, not a lack of regulatory clarity.”

In the complaint against Bittrex, the agency cited a number of digital tokens that it contends are securities. The tokens named include DASH, OMG and AGLO, among others. 

© 2023 The Block Crypto, Inc. All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.

The internet has a habit of producing companies that dominate their industry because of network effects. The answer is the decentralization and openness that only blockchain technology affords, says EY’s Paul Brody.

Kyber Network, a popular decentralized finance protocol, issued a warning to users who may have have funds deposited in its Elastic platform due to a potential security vulnerability.

The vulnerability identified in the Elastic product led Kyber Network to urge its users to withdraw their funds as a precautionary measure. The company stated that investigations are ongoing, and no user funds have been lost.

“We have identified a potential vulnerability and strongly advise all Liquidity Providers to withdraw your funds on Elastic as soon as possible,” the Kyber team said. “Investigations are ongoing, and no user funds are lost.”

Elastic is a decentralized exchange platform from Kyber that lets users swap tokens and allows liquidity providers to deposit tokens and receive a yield on their deposits.

For the time being, the team has paused users from adding liquidity. The Kyber team added it would provide further details on the situation soon when KyberSwap Elastic is re-enabled. Another exchange product offered by the project, KyberSwap Classic, remains unaffected, it added.

Elastic platform locked value declines

Following the announcement, the total value locked in the Elastic platform dropped to nearly $52 million from $105 million earlier, according to DefiLlama. This is likely due to users withdrawing their funds after the warning. 

KyberSwap Elastic incorporates the concentrated liquidity concept that was popularized by the Uniswap v3 protocol, allowing liquidity providers to specify price ranges for their liquidity positions.

© 2023 The Block Crypto, Inc. All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.

The U.S. Securities and Exchange Commission (SEC) alleged that crypto exchange Bittrex simultaneously operated a national securities exchange, broker and clearing agency in violation of federal statutes. Former CEO Bill Shihara and Bittrex Global GmbH are also facing charges.